June 15, 2016
On June 13, 2016, the Supreme Court decided Halo Electronics v. Pulse Electronics and a consolidated case, Stryker Corp. v. Zimmer. In each of these patent infringement cases, a jury had found the accused infringer liable for infringing the patent, and having done so willfully. In the Halo case, the district court declined to award enhanced damages and the Federal Circuit affirmed. In the Stryker case, the district court awarded enhanced damages, but the Federal Circuit vacated that award. The Supreme Court took the cases to determine whether the Federal Circuit’s two-part test for enhanced damages was consistent with 35 U.S.C. § 284.
Chief Justice Roberts delivered the opinion of the court, vacating the Federal Circuit’s judgments in both cases because the appellate court’s test for enhanced damages did not permit the district court to exercise the discretion afforded by § 284. The Federal Circuit’s test, adopted in In re Seagate Technology, required first that a patent owner must prove “that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent” and second, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Both prongs of the test must be shown by clear and convincing evidence. In its opinion, the Supreme Court notes that the Seagate test properly reflects that enhanced damages are available only in egregious cases; however, the test is far too rigid to reflect the level of discretion afforded to the district courts.
- Prof. Kristen Osenga, Professor of Law, University of Richmond School of Law